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ETF Specialist

Bushels of Speculation in Corn Fund

This ETF is a bet that corn prices will keep popping.

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In the Midwest, we are in the midst of the worst drought in over 50 years. It's hard to complain about heat here in Chicago, but the breadbasket of the world is taking a real hit. Persistent and extreme hot and dry conditions have prompted the USDA to make successive cuts to crop projections over the past several weeks. The current projection cuts sit in the midteens. That figure marks a significantly larger supply shock than had been expected. Not surprisingly, corn prices have skyrocketed. September corn futures are up over 50% from mid-June with later-month contracts following suit.

The fallout of the aridity hasn't been relegated to the corn markets. Wheat and beans have seen substantial positive price performance. Front-month wheat has jumped to over $9 per bushel from roughly $6.30 a month ago. Over the same period, soybeans jumped to $16.80 from $13.80.

Abraham S.H. Bailin does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.